Quantum spins off NAS business

Posted on October 16, 2002

Citing a need to concentrate on its data-protection line, Quantum is spinning off its network-attached storage (NAS) business into a new company called Snap Appliance Inc.

"We thought the NAS space had a lot of opportunity, but to really be successful it was going to take a level of investment, focus, and technology that we didn't think we could give it as part of Quantum," explains Larry Orecklin, president of Quantum's Storage Solutions Group.

The NAS business contributed a relatively small amount of revenue to Quantum, according to analysts. However, Snap Server products did comprise 38% of all NAS units shipped in the first half of this year, according to International Data Corp. (IDC). Snap Servers target the entry-level NAS market, which is characterized by high volume and low margins compared to high-end, enterprise-level NAS servers, which claim the lion's share of NAS market revenue.

In addition, Quantum's NAS line was lacking block-level functionality, which other NAS vendors have recently begun offering.

But Snap Appliance is not turning a blind eye toward NAS-SAN convergence. While the new company will continue selling Snap Servers and the Linux-based Guardian NAS family, it will also incorporate former start-up Broadband Storage's distributed file system technology, which offers file- and block-level functionality, into a new NAS device.

"There are different ways to merge block and file [I/O] and make it very simple," says Mark Pollard, vice president of marketing and business development for Snap Appliance. "It's more than just putting a NAS head on top of a SAN."

The new NAS device will enter beta this year, with volume shipments expected in the first half of next year, according to Pollard. In addition, Snap Appliance will incorporate Broadband Storage's technology into its Snap and Guardian lines.

Analysts point to Snap Server's brand recognition in the entry-level NAS market as a stepping-stone to gaining more market share. Guardian's biggest competitor is Windows-based NAS devices, which picked up market traction very quickly last year. However, IDC reports that Quantum shipped 34,700 NAS units in 2001, compared to 11,600 Windows-based NAS appliances.

Jamie Gruener, an analyst with The Yankee Group, says that Windows-based NAS will be Snap Appliance's biggest competitor. "Snap has products that go from midrange NAS down to Snap Servers that are very inexpensive, good entry-level systems, but the problem is, how do they compete?" The answer will be in how Snap Appliance differentiates itself from the large NAS vendors and the level of support that the company can put behind their products, says Gruener.

Snap Appliance will be based in San Jose, with 85 to 100 employees. Quantum will retain a 20% equity stake in the company.

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